Theory

Abstract

The contingency theory of organizations is a subset of the contingency approach in social and natural sciences. At an abstract level, the contingency approach describes a relationship between two phenomena. As its name indicates, the contingency approach holds that the effect of one phenomenon A on another phenomenon B depends on some third aspect C. Typically A represents an input that can be influenced while B is an outcome. C moderates the relationship between A and B, without necessarily being correlated with either of them (Howell et al., 1986: 89). When the value of C is low, the value of B in response to a certain value of A differs from B’s value when C is high for the same value of A. The relationship between A and B might even reverse with a change in the value of C. As shown in Figure 3, an increase in the value of A might have a positive effect on the value of B with a high C. When C is low, an increase in A might have a negative effect on B.